20000320Nikkei seen firmer on broad buying

TOKYO: Tokyo stocks are likely to trade firmer this week, with infotech shares recuperating from recent steep losses, while traditional industries are expected to gain ground as unwinding of cross-held shares comes to a halt.

"Cross-held share sales towards the business year-end are almost over. Companies like Nippon Steel Corp 5401.T and Mitsubishi Heavy Industries Ltd 7011.T will surely benefit from this," said Masayoshi Okamoto, a trader at Jujiya Securities.

Companies, traditional manufacturers and banks in particular, usually sell more of their mutually-held shares in the run-up to end-March to help pad their books.

Shares in so-called "Old Japan" sectors, most of which are domestic demand-related stocks, are likely to attract some buying also because of expectations that Japan's economic recovery remains intact.

"Recent economic data, like corporate capital spending and department store sales, are suggesting the economy is turning for the better," said Hiroyuki Nakai, senior executive officer at the investment research department at Nippon Global Securities.

"This will help traditional industries, but their strength is nowhere near strong enough to push the entire market higher."

Nakai and Okamoto said information technology shares will continue playing the major role in sending the Tokyo market higher or lower.

INFOTECHS LEAD, BUT CAUTIOUS ON NET STOCKS

Nakai said, however, that while the infotech sector remains king of the hill, there is a shift of buying interest away from Internet stocks to more down-to-earth high-tech manufacturers with solid sales and earnings, such as NEC Corp, which hit a all-time high on Friday.

A month-long slide in core Internet stocks, triggered by investors trying to lock in profit before the end-March book closings, and later exacerbated by margin calls, has prompted investors to take another serious look at Net stock valuations.

Softbank Corp and Hikari Tsushin Inc had lost more than half of their value before turning around last week.

On Friday, Internet investor Softbank rose 5.85 percent to 105,000 yen and Hikari Tsushin gained 5.35 percent to 98,500, but their levels were still far below their closing peaks in mid-February of 182,000 and 230,000 respectively.

Investors are now much more selective in picking up Net stocks, and the days of all Internet stocks moving in a pack is over, traders said.

EYES ON US RATES

Investors are expected to be somewhat jittery early this week with the U.S. Federal Reserve's policy board scheduled to meet on Tuesday, which is expected to approve a modest quarter-point interest rate hike.

The impact of the outcome of the meeting, however, will be limited for Japan as the Tokyo market has been moving mostly on domestic factors rather than on U.S. stock fluctuations, said Akihiko Sakakibara, a stock investment manager at Sumitomo Marine Asset Management.

The benchmark Nikkei average gained 1.63 percent to 19,566.32 on Friday. On the week, the index dipped 0.9 percent.

Traders expected the Nikkei to move in a range between 19,500 and 20,000 this week.

The Tokyo market will be closed on Monday for the Vernal Equinox Day holiday.-Reuters